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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as
permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec.
240.14a-12
WICOR, Inc.
-----------------------------------------------
(Name of Registrant as Specified in its Charter)
- -----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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WICOR
626 East Wisconsin Avenue
P.O. Box 334
Milwaukee, WI 53201
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 23, 1998
To the Shareholders of
WICOR, Inc.:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of
Shareholders of WICOR, Inc. will be held Thursday, April 23,
1998, at 2:00 P.M. (local time), at the Italian Community Center,
631 East Chicago Street, Milwaukee, Wisconsin, for the following
purposes:
1. To elect four directors to hold office until the 2001
Annual Meeting of Shareholders and until their
successors are duly elected and qualified.
2. To approve the 1994 Long-Term Performance Plan, as
amended.
3. To consider and act upon any other business which
may be properly brought before the Annual Meeting or any
adjournment or postponement thereof.
The close of business Monday, February 23, 1998, has been
fixed as the record date for the determination of shareholders
entitled to receive notice of, and to vote at, the Annual Meeting
and any adjournment or postponement thereof.
A proxy and Proxy Statement are enclosed herewith.
By Order of the Board of Directors
Robert A. Nuernberg
Secretary
March 13, 1998
YOUR VOTE IS IMPORTANT. TO ASSURE YOUR REPRESENTATION AT THE ME
ETING, PLEASE DATE THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE
BOARD OF DIRECTORS, SIGN EXACTLY AS YOUR NAME APPEARS, AND RETURN
IMMEDIATELY.
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WICOR
626 East Wisconsin Avenue
P.O. Box 334
Milwaukee, Wisconsin 53201
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 23, 1998
This Proxy Statement is being furnished to shareholders by
the Board of Directors of WICOR, Inc. (the "Company") beginning
on or about March 13, 1998, in connection with a solicitation of
proxies by the Board of Directors of the Company (the "Board")
for use at the Annual Meeting of Shareholders (the "Annual
Meeting") to be held on Thursday, April 23, 1998, at 2:00
P.M.(local time), at the Italian Community Center, 631 East
Chicago Street, Milwaukee, Wisconsin, and at all adjournments or
postponements thereof, for the purposes set forth in the attached
Notice of Annual Meeting of Shareholders.
Execution of a proxy given in response to this solicitation
will not affect a shareholder's right to attend the Annual
Meeting and to vote in person. Presence at the Annual Meeting of
a shareholder who has signed a proxy does not in itself revoke
the proxy. Any shareholder giving a proxy may revoke it at any
time before it is exercised by giving notice thereof to the
Company in writing or in open meeting. Unless so revoked, the
shares represented by proxies received by the Board will be voted
at the Annual Meeting and at any adjournment or postponement
thereof. A properly executed proxy will be voted as directed
therein by the shareholder.
Only holders of record of the Company's Common Stock, $1 par
value ("Common Stock"), at the close of business on February 23,
1998, are entitled to vote at the Annual Meeting and at any
adjournment or postponement thereof. On that date, the Company
had outstanding and entitled to vote 18,627,281 shares of Common
Stock. The record holder of each outstanding share of Common
Stock is entitled to one vote per share.
The Company is a holding company. Its principal subsidiaries
include Wisconsin Gas Company ("Wisconsin Gas"), WICOR
Industries, Inc. ("WICOR Industries"), Sta-Rite Industries, Inc.
("Sta-Rite"), SHURflo Pump Manufacturing Co.("SHURflo"), Hypro
Corporation ("Hypro"), WICOR Energy Services Company ("WICOR
Energy") and FieldTech, Inc. ("FieldTech").
ITEM NO. 1: ELECTION OF DIRECTORS
The Board consists of 10 directors. The Company's By-laws
provide that the directors shall be divided into three classes,
with staggered terms of three years each. At the Annual Meeting,
shareholders will elect four directors to hold office until the
2001 Annual Meeting of Shareholders and until their successors
are duly elected and qualified. Directors are elected by a
plurality of the votes cast (assuming a quorum is present at the
Annual Meeting). Consequently any shares not voted, whether due
to abstentions, or otherwise, have no impact on the election of
directors. However, abstentions are counted in determining
whether a quorum is present at the meeting.
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Unless shareholders otherwise specify, the shares represented
by the proxies received will be voted "FOR" the indicated
nominees for election as directors. The Board has no reason to
believe that any of the listed nominees will be unable or
unwilling to continue to serve as a director if elected.
However, in the event that any nominee should be unable or for
good cause unwilling to serve, the shares represented by proxies
received will be voted for another nominee selected by the Board.
The following sets forth information regarding the four
nominees for election as directors and the six continuing
directors. Except as otherwise noted, each such person has
engaged in the principal occupation or employment and held the
offices shown for more than the past five years.
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NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
For Three-Year Terms Expiring April, 2001
A photograph of each nominee and director continuing in office
appears adjacent to the nominee's/director's name and personal
information
WENDELL F. BUECHE Mr. Bueche, 67, is the Chairman and a
Audit and Compensation director of IMC Global, Inc., a producer
Committees and marketer of crop nutrients. He was
Director since 1984 named to that position in 1997. He served
as Chairman and Chief Executive Officer of
IMC from 1994 to 1997 and as President and
Chief Executive Officer from 1993 to 1994.
Mr. Bueche previously was Chairman,
President and Chief Executive Officer of
Allis-Chalmers Corporation. Mr. Bueche is a
director of Marshall & Ilsley Corporation
and M&I Marshall & Ilsley Bank.
DANIEL F. McKEITHAN, JR. Mr. McKeithan, 62, is President, Chief
Compensation and Retirement Executive Officer and a director of
Plans Investment (Chairman) Tamarack Petroleum Company, Inc., an
Committees operator of producing oil and gas wells.
Director since 1989 Since 1995 he has also been President and
Chief Executive Officer of both Active
Investor Management, Inc., a manager of oil
and gas wells, and SeisTech Development,
Inc., an oil and gas exploration and
development company. He is a director of
Firstar Corporation and The Marcus
Corporation, and is a Trustee of The
Northwestern Mutual Life Insurance Company.
GEORGE E. WARDEBERG Mr. Wardeberg, 62, is Chairman and Chief
Nominating Committee Executive Officer of the Company and
Director since 1992 Chairman of its subsidiaries. He was
elected Chairman and Chief Executive
Officer of the Company in 1997. Previously,
he was President and Chief Executive
Officer of the Company from 1994 to 1997.
He has held his positions with Wisconsin
Gas, Sta-Rite and SHURflo since 1994; with
Hypro and WICOR Energy since 1995; and with
FieldTech since 1996. He served in other
executive capacities with the Company and
its subsidiaries beginning in 1989. He is a
director of M&I Marshall & Ilsley Bank and
Twin Disc, Inc.
ESSIE M. WHITELAW Ms. Whitelaw, 49, is Vice President -
Nominating and Retirement National Business Development and Govern-
Plans Investment Committees ment Employee Services of Blue Cross & Blue
Director since 1992 Shield United of Wisconsin, a comprehensive
health care insurer. She has held her
current position since 1997. Previously,
she served as President and Chief Operating
Officer of Blue Cross & Blue Shield United
from 1992 to 1997. She is a director of
Universal Foods Corporation.
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MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING APRIL, 1999
JERE D. McGAFFEY Mr. McGaffey, 62, is a partner in the law firm
Nominating (Chairman) and of Foley & Lardner.(1) He has been in practice
Retirement Plans Investment with that firm since 1961 and has been a
Committees partner since 1968. Mr. McGaffey is a director
Director since 1980 of Smith Investment Company.
THOMAS F. SCHRADER Mr. Schrader, 48, is President and Chief
Director since 1988 Operating Officer of the Company and Vice
Chairman of Wisconsin Gas, WICOR Energy and
FieldTech. He was elected to those positions
in 1997. Previously, he served as President
and Chief Executive Officer of Wisconsin Gas,
WICOR Energy and FieldTech, and Vice President
of the Company. Mr. Schrader is a director of
Firstar Bank Milwaukee, N.A.
STUART W. TISDALE Mr. Tisdale, 69, retired as Chairman and Chief
Audit and Nominating Executive Officer of the Company in 1994. He
Committees is a director of Marshall & Ilsley Corporation
Director since 1980 Corporation, M&I Marshall & Ilsley Bank,
Modine Manufacturing Co. and Twin Disc Inc.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING APRIL, 2000
WILLIE D. DAVIS Mr. Davis, 63, is President, Chief
Audit (Chairman) and Executive Officer and a director of All Pro
Compensation Committees Broadcasting, Inc., which owns and operates
Director since 1990 radio stations in Los Angeles and Milwaukee.
Mr. Davis is a director of Alliance Bank, The
Dow Chemical Co., Johnson Controls, Inc.,
Kmart Corp., L.A. Gear Inc., MGM Grand Inc.,
Rally's Hamburgers, Inc., Sara Lee Corporation
and Strong Capital Management, Inc.
GUY A. OSBORN Mr. Osborn, 62, retired as Chairman of
Compensation (Chairman) and Universal Foods Corporation, an international
Retirement Plans Investment manufacturer and marketer of value-added food
Committees products, in 1997. He is a director of
Director since 1987 Universal Foods Corporation and Fleming
Companies, Inc., and is a Trustee of The
Northwestern Mutual Life Insurance Company.
WILLIAM B. WINTER Mr. Winter, 69, retired as Chairman, Chief
Audit and Nominating Executive Officer and a director of Bucyrus-
Committees Erie Company, a manufacturer of mining
Director since 1980 machinery, and its parent corporation B-E
Holdings Inc., in 1994.
(1) Foley & Lardner was retained in 1997 by the Company and its
subsidiaries to provide legal services and has been similarly
retained in 1998.
THE BOARD RECOMMENDS A VOTE "FOR" ALL NOMINEES FOR ELECTION AS
DIRECTORS, ITEM NO. 1. PROXIES SOLICITED BY THE BOARD OF
DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY A
DIFFERENT CHOICE.
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THE BOARD OF DIRECTORS
GENERAL
The Board held seven meetings in 1997. Each director
attended at least 75% of the total of such meetings and meetings
of any committees on which such director served. The Board
maintains standing Audit, Nominating, Compensation, and
Retirement Plans Investment Committees.
The Audit Committee held two meetings in 1997. The
committee's functions include recommending the selection of the
independent auditors each year; consulting with the independent
auditors regarding the scope and plan of audit, internal
controls, fees, non-audit services (including the possible effect
of such services on the independence of the auditors), the audit
report and related matters; reviewing other accounting, internal
audit and financial matters; investigating accounting, auditing
or financial exceptions which may occur; and overseeing the
corporate compliance programs of the Company and its
subsidiaries.
The Nominating Committee held two meetings in 1997. The
committee's functions include recommending those persons to be
nominated by the Board for election as directors of the Company
at the next Annual Meeting of Shareholders and recommending the
person to fill any unexpired term on the Board which may occur.
The committee will consider nominees recommended by shareholders,
but has no established procedures which must be followed to make
recommendations.
The Compensation Committee held three meetings in 1997. The
committee's functions include reviewing and recommending
adjustments to the salaries of the officers of the Company and
the presidents of its subsidiaries; administering the 1987 Stock
Option Plan, the 1992 Director Stock Option Plan, the Director
Deferred Stock Plan, the 1994 Long-Term Performance Plan and the
other incentive compensation plans of the Company and its
subsidiaries; and reviewing and recommending director
compensation.
The Retirement Plans Investment Committee held three meetings
in 1997. The committee's functions include generally overseeing
the management of Company and subsidiary retirement and other
employee benefit and welfare plans. The committee determines
investment policy, selects the trustees and investment managers,
and monitors and evaluates the performance of the trustees and
investment managers. The committee also recommends to the Board
changes in plan design.
COMPENSATION OF DIRECTORS
The Company revised its director compensation program
effective January 1, 1997, to eliminate the retirement plan for
directors, to tie more of the directors' compensation to the
performance of the Common Stock, and to adjust the overall
compensation level. Only non-employee directors receive
compensation for service as directors.
Cash Compensation. The Company pays its directors the
following cash compensation: an annual retainer fee of $6,000,
$600 for each Board meeting they attend, and $900 for each Board
committee meeting they attend. Committee chairmen are paid an
additional annual retainer fee of $1,000 and receive meeting fees
for meetings with the Chief Executive Officer of the Company
relating to committee business. Wisconsin Gas pays its directors
an annual cash retainer fee of $4,000, and $600 for each Board
meeting they attend.
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Presently, all directors of Wisconsin Gas are also directors of
the Company. Any fees payable to directors in cash may, at the
option of each individual director, be deferred for future
payment as discussed below.
Deferred Compensation. The Company and Wisconsin Gas have
identical deferred stock plans for directors. Under the deferred
stock plans, each director receives on January 1 of each year,
557 deferred stock units (334 from the Company and 223 from
Wisconsin Gas). Each stock unit has an economic value equivalent
to a share of Common Stock. As of December 31, 1997, these
deferred stock units had a value of $25,866 based on the price of
a share of Common Stock on that date ($46.4375). Each deferred
stock unit is credited with an amount equal to the dividend paid
on a share of Common Stock if and when such dividends are
declared and paid. Such dividend-equivalent amounts will be
converted into deferred stock units based on the per-share price
on the dividend payment date. When a director retires, leaves
the Board or dies, the director's account balance will be paid
out in shares of Common Stock. The Company (for itself and on
behalf of Wisconsin Gas) intends to purchase Common Stock on the
open market from time to time in its discretion to accumulate
shares of Common Stock to be used for settlement of deferred
stock balances. However, neither the Company nor Wisconsin Gas
intends to fund its future payment obligations under its deferred
stock plan. On January 1, 1997, directors also received a one-
time grant of deferred stock units corresponding to the then
present value of their accrued benefit under the director
retirement plan which was terminated on December 31, 1996.
The Company and Wisconsin Gas each maintain a deferred
compensation plan for directors which entitles a director to
defer directors' fees otherwise payable in cash for payment when
the director ceases to be a director. Fees may be deferred for
settlement in cash or shares of Common Stock, at the election of
the director. Amounts deferred for settlement in cash accrue
interest at the prevailing announced prime interest rate of a
major commercial bank. Amounts deferred for settlement in Common
Stock are converted into deferred stock units based on the per-
share price on the date of deferral. Each deferred stock unit
will be credited with an amount equal to the dividend paid on a
share of Common Stock if and when such dividends are declared and
paid. Each director may elect to receive payment of the
director's deferred account balance in a lump sum or in equal
installments over ten years.
All amounts deferred are unsecured. The Company has entered
into an executive trust agreement with Marshall & Ilsley Trust
Company to provide a means of segregating assets for the payment
of director deferred compensation, subject to the claims of the
Company's creditors. Such trust is only nominally funded until
the occurrence of a potential change of control.
Stock Options. Directors participate in the 1992 Director
Stock Option Plan, pursuant to which options to purchase 2,000
shares of Common Stock are automatically granted annually on the
fourth Tuesday in February to each non-employee director. The
exercise price per share for options granted under the 1992
Director Stock Option Plan is equal to the fair market value of a
share of Common Stock on the date of grant. On February 25,
1997, Messrs. Bueche, Davis, McGaffey, McKeithan, Osborn, Tisdale
and Winter and Ms. Whitelaw each received an option to purchase
2,000 shares of Common Stock at a per-share exercise price of
$36.125. Options granted under the 1992 Director Stock Option
Plan are immediately exercisable and have a ten-year term;
provided, however, that no option may be exercised after 24
months have elapsed from the date the optionee ceased being a
director. On February 24, 1998, options to purchase an
additional 2,000 shares of Common Stock were granted to each non-
employee director at a per-share exercise price of $46.875.
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SECURITY OWNERSHIP OF MANAGEMENT
The following tabulation sets forth the number of shares of
Common Stock beneficially owned, as of February 28, 1998, by each
director and nominee, each executive officer named in the Summary
Compensation Table, and all directors and executive officers as a
group. The tabulation also reflects the number of deferred stock
units held by each such person.
Amount and Nature
Name of of Beneficial Percent of Deferred Stock
Beneficial Owner Ownership (1) (2) (3) Class (4) Units (5)
- ---------------------- --------------------- --------- ---------------
Wendell F. Bueche 14,168 - 6,520
Willie D. Davis 12,533 - 4,474
James C. Donnelly 85,616 -
Jere D. McGaffey 15,229 - 4,934
Daniel F. McKeithan, Jr. 13,000 - 4,446
Robert A. Nuernberg 44,284 -
Guy A. Osborn 14,000 - 4,948
Thomas F. Schrader 141,811 -
Stuart W. Tisdale 90,081 (6) - 4,747
George E. Wardeberg 99,999 (7) -
Joseph P. Wenzler 142,419 (8) -
Essie M. Whitelaw 12,000 - 1,949
William B. Winter 14,588 (9) - 6,415
All directors and
executive officers as
a group (14 persons) 699,728 3.8% 38,433
(1) Except as otherwise noted in the footnotes to the table,
each beneficial owner exercises sole voting and investment
power with respect to the shares shown as owned
beneficially.
(2) Includes the following numbers of shares covered under
options exercisable as of or within 60 days of February 28,
1998: Mr. Donnelly, 75,649; Mr. Nuernberg, 31,248; Mr.
Schrader, 98,824; Mr. Wardeberg, 54,499; Mr. Wenzler,
90,650; Messrs Bueche, Davis, McGaffey, McKeithan, Osborn
and Winter and Ms. Whitelaw, 12,000 each; Mr. Tisdale,
10,000; and all directors and executive officers as a group,
448,870.
(3) Includes the following numbers of shares of restricted stock
over which the holders have sole voting but no investment
power: Mr. Donnelly, 5,500; Mr. Nuernberg, 1,200; Mr.
Schrader, 6,000; Mr. Wardeberg, 11,600; and Mr. Wenzler,
4,500; and all directors and executive officers as a group,
28,800. The number of shares include restricted stock
grants to become effective April 23, 1998, following
approval by the shareholders of the 1994 Long-Term
Performance Plan, as amended. See "Item No. 2, Approval of
the 1994 Long-Term Performance Plan, as amended -
Outstanding Future Awards." The restricted stock vests three
years after grant if the Company's total return to
shareholders for the three-year period exceeds a pre-
established goal.
(4) Where no percentage figure is set out in this column, the person owns
less than 1% of the outstanding shares.
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(5) Deferred stock units are issued under the deferred stock
plans and the deferred compensation plan discussed under
"Compensation of Directors - Deferred Compensation."
(6) Includes 4,852 shares owned by Mr. Tisdale's spouse.
(7) Includes 4,200 shares owned jointly by Mr. Wardeberg and his spouse.
(8) Includes 526 shares owned by Mr. Wenzler's spouse.
(9) Includes 2,588 shares owned by Mr. Winter's spouse.
EXECUTIVE COMPENSATION
The following tabulation is a three-year summary of the
compensation awarded or paid to, or earned by, the persons who
served as Company's chief executive officer during 1997 and each
of the Company's four other most highly compensated executive
officers whose total cash compensation exceeded $100,000 in 1997.
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SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation Awards
---------------------------- --------------------------
Securities
Restricted Underlying All Other
Name and Principal Stock Options/ Compensation
Position Year Salary ($) Bonus ($) Awards ($)(2) SARs (#) ($) (3)
- ------------------------------ ---- ---------- --------- ------------- ---------- ------------
George E. Wardeberg, Chairman 1997 $ 440,833 $185,200 20,000 $ 19,233
and Chief Executive Officer 1996 $ 393,750 $217,638 $ 264,000 20,000 $ 17,250
of the Company and its sub- 1995 $ 368,750 $192,455 15,000 $ 16,250
sidiaries (4)(7)
Thomas F. Schrader, President 1997 $ 321,616 $144,700 10,000 $ 14,465
and Chief Operating Officer 1996 $ 290,650 $177,903 $ 132,000 10,000 $ 13,126
of the Company and Vice 1995 $ 278,500 $176,857 10,000 $ 12,640
Chairman of certain of its
subsidiaries(5)
James C. Donnelly, Vice-Pres- 1997 $ 287,250 $ 78,000 10,000 $ 14,775
ident of the Company and 1996 $ 277,525 $ 59,218 $ 132,000 10,000 $ 12,735
President and Chief Execu- 1995 $ 267,800 $ 28,253 10,000 $ 13,185
tive Officer of Sta-Rite
Joseph P. Wenzler, Senior 1997 $ 286,825 $ 96,400 7,500 $ 13,073
Vice President, Treasurer 1996 $ 272,050 $120,296 $ 99,000 7,500 $ 12,382
and Chief Financial Officer 1995 $ 261,850 $106,700 7,500 $ 11,974
of the Company; Vice Presi-
dent and Chief Financial
Officer of Wisconsin Gas;
Secretary and Treasurer of
SHURflo and Hypro; and Vice-
President and Treasurer of
WICOR Energy and FieldTech (6)(7)
Robert A. Nuernberg, Secretary 1997 $ 148,875 $ 39,000 2,000 $ 7,444
of the Company, WICOR Energy 1996 $ 142,750 $ 49,125 $ 26,400 2,000 $ 7,138
and FieldTech; Vice Presi- 1995 $ 138,000 $ 48,307 2,000 $ 6,900
dent-Corporate Relations and
Secretary of Wisconsin Gas (7)
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(1)The aggregate amount of personal benefits provided by the
Company and its subsidiaries to the executive officers named
in this table in any year did not exceed the lesser of
$50,000 or 10% of each officer's annual salary and bonus
reported in the table for any of the years indicated.
(2)The amounts in the table reflect the market value on the date
of grant of restricted stock awarded under the 1994 Long-Term
Performance Plan. The number of shares of restricted stock
held by the executive officers named in the table and the
market value of such shares as of December 31, 1997, were as
follows: Mr. Wardeberg, 8,000 shares, $371,500; Messrs.
Schrader and Donnelly, 4,000 shares, $185,750; Mr. Wenzler,
3,000 shares, $139,313; and Mr. Nuernberg, 800 shares,
$37,150. The restricted stock vests three years after
issuance provided the Company's three-year total return to
shareholders exceeds a pre-established goal. Holders of
shares of restricted stock are entitled to receive dividends
on such shares. The numbers of shares of restricted stock
held by the named officers on February 28, 1998, are set out
in footnote 3 to the Security Ownership of Management table.
(3)The amounts shown in this column for 1997 are comprised of
the following items: Company contributions to 401(k) and
supplemental savings plans: Mr. Wardeberg, $19,233; Mr.
Schrader, $14,465; Mr. Donnelly, $13,090; Mr. Wenzler,
$13,073; and Mr. Nuernberg, $7,444; and above-market earnings
on deferred compensation: Mr. Donnelly, $1,685.
(4)On July 22, 1997, Mr. Wardeberg was elected Chairman and
Chief Executive Officer of the Company. He previously served
as President and Chief Executive Officer. He continues as
Chairman of the Company's subsidiaries.
(5)On July 22, 1997, Mr. Schrader was elected President and
Chief Operating Officer of the Company. He previously served
as Vice President. On December 16, 1997, Mr. Schrader was
elected Vice Chairman of Wisconsin Gas, WICOR Energy and
FieldTech. He previously served as President and Chief
Executive Officer of those subsidiaries.
(6)On July 22, 1997, Mr. Wenzler was elected Senior Vice
President, Treasurer and Chief Financial Officer of the
Company. He previously served as Vice President, Treasurer
and Chief Financial Officer. He continues in his positions
with the Company's subsidiaries.
(7)These executive officers were elected to their positions with
SHURflo in 1993, Hypro and WICOR Energy in 1995, and
FieldTech in 1996.
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Stock Option Information
The Company has in effect benefit plans pursuant to which
options to purchase Common Stock may be granted to key employees
(including executive officers) of the Company and its
subsidiaries. The following tabulation sets forth information
regarding grants of options made by the Company in 1997 to the
executive officers named in the Summary Compensation Table. No
SARs were awarded in 1997.
OPTION/SAR GRANTS IN 1997 FISCAL YEAR
Individual Grants
- ---------------------------------------------------------------------------------
Number of Sec. Percent of Total Grant
Underlying Options Granted Exercise or Date
Options/SARs to Employees Base Expiration Present
Name Granted (#) (1) in Fiscal Year Price ($/sh.) Date Value (2)
- ------------------- --------------- ---------------- ------------- ---------- ---------
George E. Wardeberg 20,000 7.9 $ 35.1875 2/18/07 $ 84,400
Thomas F. Schrader 10,000 3.9 $ 35.1875 2/18/07 $ 42,200
James C. Donnelly 10,000 3.9 $ 35.1875 2/18/07 $ 42,200
Joseph P. Wenzler 7,500 3.0 $ 35.1875 2/18/07 $ 31,650
Robert A. Nuernberg 2,000 0.8 $ 35.1875 2/18/07 $ 8,440
(1)The options reflected in the table (which are nonstatutory
stock options for purposes of the Internal Revenue Code) were
granted on February 18, 1997 and vest ratably over the three-
year period from the date of grant.
(2) Amounts in this column were calculated using the Black-
Scholes option pricing model. The model assumes: (a) an option
term of 10 years and an average life of 5.64 years; (b) a risk-
free interest rate of 5.09%; (c) volatility (variance of rate of
return) of 15.94%; and (d) a dividend yield of 4.8%. The actual
value, if any, that an optionee may realize upon exercise will
depend upon the excess of the price of the Common Stock over the
option exercise price on the date that the option is exercised.
There is no assurance that the value received by the optionee
will be at or near the value estimated by the Black-Scholes
model.
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The following tabulation sets forth information regarding the
exercise of stock options during 1997 and the unexercised options
held at December 31, 1997, by each of the executive officers
named in the Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES IN 1997 FISCAL YEAR,
AND FY-END OPTION/SAR VALUES
Numbers of
Securities Underlying Value of Unexercised
Unexercised Options/ In-the-Money Options/
Shares SARs at FY-End (#) SARs at FY-End ($)
Acquired on Value ------------------------- -------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ----------- ----------- ----------- ------------- ----------- -------------
George E. Wardeberg 0 $ 0 36,166 38,334 $ 594,699 $ 495,113
Thomas F. Schrader 0 $ 0 93,424 20,001 $2,121,815 $ 262,725
James C. Donnelly 0 $ 0 65,649 20,001 $1,424,103 $ 262,725
Joseph P. Wenzler 0 $ 0 87,750 15,000 $2,027,881 $ 197,031
Robert A. Nuernberg 0 $ 0 29,249 4,001 $ 687,907 $ 52,651
PENSION AND RETIREMENT PLANS
The Company and its subsidiaries maintain pension and
retirement plans in which the executive officers and other
employees participate. The Company and its subsidiaries also
maintain supplemental retirement plans for officers and certain
other employees to reflect certain compensation that is excluded
under the retirement plans and to provide benefits that otherwise
would have been accrued or payable except for the limitations
imposed by the Internal Revenue Code.
Effective January 1, 1998, the basic pension plan was amended
to restate the benefit accrual as a "cash balance" formula.
Under a cash balance pension plan, a participant's benefit is
based on an annual accrual of a percentage of current year's
compensation, with such annual accruals being combined and
adjusted by an earnings factor. The actual pension benefit is
then determined by converting such lump sum balance into an
equivalent annuity value.
The Company's cash balance formula provides an annual accrual
of 6% of salary and bonus, with a guaranteed earnings rate of 4%.
In its discretion, the Company may amend the plan from year to
year to grant a higher earnings rate for the applicable year. In
order to recognize the pre-1998 service and compensation of
current participants, the plan grants each participant a special
transition credit. In addition, in order to protect such
existing participants, the revised pension plan guarantees that
for employment through December 31, 2007, the benefit accrual
will not be less under the new cash balance formula than under
the pre-1998 final average earnings formula.
15
The plan's actuaries project that for long-service employees
the revised cash balance formula will provide substantially
equivalent benefits commencing at age 65 as under the pre-1998
"final average earnings" formula. Such projection is subject to
the applicable earnings rate that is applied from time to time to
the cash balance account and to future interest rates. The plan's
actuaries have projected the ultimate benefits for the named
executive officers. Because of the ten-year guarantee until the
end of 2007 and the fact that Messrs. Wardeberg, Wenzler and
Nuernberg will have attained age 65 prior to that time, the
actuaries project that the pre-1998 final average earnings
formula will provide the better benefit.
The following tabulation sets forth estimated annual
retirement benefits payable under the pension plans, as
supplemented, for Messrs. Wardeberg, Wenzler and Nuernberg. It
is based on the final average earnings formula for the indicated
levels of final average earnings with various periods of credited
service. Benefits reflected in the table are based on a straight
life annuity and an assumed age of 65. The election of other
available payment options would change the retirement benefits
shown in the table. The plan does not provide for reduction of
retirement benefits to offset Social Security or any other
retirement benefits.
PENSION PLAN TABLE
Remuneration 10 15 20 25 30
- ------------ ---------- ---------- ---------- ---------- ----------
$ 300,000 $ 58,726 $ 88,089 $ 117,452 $ 134,384 $ 138,884
$ 400,000 $ 78,526 $ 117,789 $ 157,052 $ 179,684 $ 185,684
$ 500,000 $ 98,326 $ 147,489 $ 196,652 $ 224,984 $ 232,484
$ 600,000 $ 118,126 $ 177,189 $ 236,252 $ 270,284 $ 279,284
$ 700,000 $ 137,926 $ 206,889 $ 275,852 $ 315,584 $ 326,084
$ 800,000 $ 157,726 $ 236,589 $ 315,452 $ 360,884 $ 372,884
For Messrs. Schrader and Donnelly, who have more than 10
years until their attainment of the normal retirement age of 65,
using a 6.5% earnings assumption and assuming continuation of
compensation at the level paid in 1997 as defined in the plan,
the plan actuaries projected estimated annual benefits under the
pension plan, as supplemented, payable upon retirement at normal
retirement age of 65 of $280,995 and $139,660, respectively.
The compensation covered by the pension plan, as
supplemented, for the named executive officers includes all
compensation reported for each individual as salary and bonus in
the Summary Compensation Table. Messrs. Wardeberg, Schrader,
Donnelly, Wenzler and Nuernberg have 8, 19, 10, 23 and 28 years,
respectively, of credited service under the pension plan.
Pursuant to a supplemental retirement plan, Messrs. Schrader and
Nuernberg will receive a supplemental retirement benefit of
$25,000 per year for 15 years beginning at age 65, payable in
monthly installments.
16
A retired executive officer who is married at the time of
retirement and selects one of the available joint and surviving
spouse annuity payment options will also receive the difference
between the monthly benefits payable under the single life
annuity payment option and the 50% joint and surviving spouse
annuity payment option for the lives of the retired officer and
spouse. Upon the death of the retired officer, the surviving
spouse will receive 50% of the supplemental benefit for life.
The Company has entered into an executive trust agreement
with Marshall & Ilsley Trust Company to provide a means of
segregating assets for the payment of these benefits (as well as
benefits under the Company's supplemental retirement plan),
subject to the claims of the Company's creditors. Such trust is
only nominally funded until the occurrence of a potential change
of control.
AGREEMENTS WITH CERTAIN EXECUTIVE OFFICERS
The Company has agreements with Messrs, Wardeberg, Schrader,
Donnelly and Wenzler that provide that each such executive
officer is entitled to benefits if, following a change of control
(as such term is defined in the agreements), the officer's
employment is ended through (i) termination by the Company, other
than by reason of death or disability or for cause (as defined in
the agreements), or (ii) termination by the officer following the
first anniversary of the change in control or due to a breach of
the agreement by the Company or a significant change in the
officer's responsibilities. In general, the benefits provided
are: (i) a cash termination payment of up to three times the sum
of the executive officer's annual salary and his highest annual
bonus during the three years before the termination, (ii)
supplemental pension benefits,(iii) continuation of equivalent
hospital, medical, dental, accident, disability and life
insurance coverage as in effect at the time of termination, and
(iv) outplacement services. The agreements also provide the
foregoing benefits in connection with certain terminations that
are effected in anticipation of a change of control. Each
agreement provides that if any portion of the benefits under the
agreement or under any other agreement for the officer would
constitute an "excess parachute payment" for purposes of the
Internal Revenue Code, benefits will be reduced so that the
officer will be entitled to receive $1 less than the maximum
amount which he could receive without becoming subject to the 20%
excise tax imposed by the Code, or which the Company may pay
without loss of deduction under the Code.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered
by the Compensation Committee of the Board. The Compensation
Committee is comprised of four independent, non-employee
directors. Following Compensation Committee review and approval,
matters relating to executive compensation (other than the grant
of stock options and restricted stock) are submitted to the full
Board for approval. The Compensation Committee utilizes an
independent compensation consultant. The consultant provides
advice to the Committee on compensation-related issues, including
incentive plan design and competitive compensation data for
officer positions.
17
Compensation Policies
Policies are used to set a general direction and as a
backdrop against which specific compensation decisions are made.
-Design of executive pay programs is intended to attract
and retain top talent, motivate and reward performance.
-Differences in pay practices and performance measures
between the Company's primary lines of business are
recognized.
-Compensation opportunities, by component and in the
aggregate, are targeted at the median (50th percentile) of
competitive practice. Actual compensation earned by an
executive may exceed the market median for above average
performance and be less than median for performance that
is below expectation.
-Achievement of incentive compensation levels is dependent
on attainment of performance goals as agreed to by the
Board annually. These goals relate to the achievement of
the Company's operating and financial plan, individual
objectives and milestones in the Company's longer-term
strategic plan.
-In business units where an all-employee bonus or profit-
sharing program exists, a portion of each executive's
incentive compensation is determined on the same criteria.
-The focus on enhancement of shareholder value is
accomplished by tying a significant portion of total pay
to performance of the Company's stock.
In assessing executive performance and pay, the members of
the Compensation Committee consider and weigh in their judgment
factors outside the formal incentive plans. These factors
include operational and financial measures not specifically
incorporated in the incentive plans, and actual performance in
dealing with unanticipated business conditions during the year.
The Compensation Committee believes such factors should be
considered in addition to the more formalized factors to assess
and reward executive performance properly.
Base salary midpoints, annual incentive targets and long-term
incentive grants are set based on a competitive analysis
conducted by the independent compensation consultant. As
indicated above, compensation opportunities, by component and in
the aggregate, are set at or near the 50th percentile of
competitive practice for comparably sized organizations. Rates
for the gas utility positions are set using survey sources from
the utility industry. There is substantial overlap between the
companies in these surveys and the companies used in the peer
company index in the Performance Graph. Rates for the nonutility
positions are set using survey sources from general industry;
there is no overlap with the Performance Graph peer companies
here.
18
Components of Compensation
Base salary. The Compensation Committee targets salary range
midpoints as indicated above. Individual salaries range above and
below the midpoint based upon an individual's past and current
performance, and expectations for future performance. The
factors considered in this review are job specific and vary
depending on the individual's position. There is no specific
weighting given to these factors.
Annual incentive plan. The Company's annual incentive
compensation plan tailors each officer's incentive potential to
that officer's Company and subsidiary responsibilities. The plan
sets incentive targets ranging from 20% to 50% of base salary.
The plan is designed to compensate the officers primarily on a
formula basis. For the Chief Executive Officer, Chief Operating
Officer and the Chief Financial Officer, the formula bases 75% of
the targeted award on the Company's return on capital and 25% on
individual performance objectives. The return on capital
calculation is further modified by performance against earnings
per share growth. For Company Vice Presidents, who are also the
subsidiary presidents, the formula bases 75% of the targeted
award on the subsidiary's return on capital and 25% on individual
performance objectives. The return on capital calculation is
further modified by performance against sales growth for Sta-Rite
and by performance against rate comparison, customer service,
safety and cost effectiveness criteria for Wisconsin Gas.
Individual performance objectives vary among the officers, but
may include such things as cost management, product development,
sales growth, personnel management and development, and
management of specific projects. The Compensation Committee
exercises its judgment on a case-by-case basis in determining the
weight to be accorded any individual performance objective.
Long-term incentive plan. The Company's long-term incentive
compensation plan provides for annual awards of stock options and
biennial awards of performance-based restricted stock. The plan
splits an officer's long-term incentive opportunity equally
(based on value) between stock options and performance-based
restricted stock. The independent compensation consultant
provides the Compensation Committee with a long-term incentive
grant schedule that approximates a market median grant
opportunity. The Compensation Committee reserves the right to
adjust this schedule upward or downward based on Company
performance; however, it is the Compensation Committee's
intention that in most cases grants will be provided at targeted
levels.
Stock options may be incentive stock options or nonstatutory
options which have a term of not more than ten years and have an
exercise price equal to the fair market value on the date of
grant. The Compensation Committee determines the manner and
conditions under which the options become exercisable. The
number of options granted is based on the participant's office or
position, with an equal number of shares generally being granted
to individuals holding the same or similar positions, such as
vice president of an operating subsidiary. Performance-based
restricted stock will vest three years from the year of grant
provided the Company's three-year total return to shareholders
equals or exceeds pre-established goals relative to the
Performance Graph peer group (the PaineWebber Gas Distribution
Utility Index). For other subsidiary officers who participate in
the plan, the restricted stock will vest in three-years provided
the appropriate subsidiary's three-year financial performance
(three-year cumulative earnings for Wisconsin Gas and return on
assets for Sta-Rite) equals or exceeds the pre-established goal.
19
Compensation of Officers
The Compensation Committee sets base salaries of officers
within the established ranges. The Compensation Committee
considers specified financial measures tailored to the Company
and each subsidiary, each officer's contribution to achieving
corporate goals, and such officer's achievement of personal
performance objectives. Examples of financial measures are net
income earned relative to budget, return on capital, return on
total assets, return on sales, and rate of return earned versus
allowed. The Compensation Committee weighs the financial
measures differently for each officer, in recognition that the
Company's principal subsidiaries operate in different industries
with different compensation practices and that the officers'
responsibilities differ. For example, the rate of return earned
versus that nominally allowed by state regulatory authorities
having jurisdiction over the gas utility subsidiary is applicable
only to officers of the utility company, whereas return on total
assets and return on sales are applicable primarily to officers
of the manufacturing subsidiaries. Examples of personal
performance objectives considered by the Compensation Committee
are set out above in the discussion of the Annual Incentive Plan.
The Compensation Committee exercises its judgment in determining
the relative weight to be accorded each personal objective.
As stated above, each officer's annual incentive award, if
any, is based on a formula, although the Compensation Committee
exercises its judgment in determining the weights to be accorded
the achievement of personal objectives. Long-term incentive
awards (stock options and restricted stock) are also formula-
based, with individual awards being set relative to the officer's
position. The specific number of stock options awarded is based
on the number of options to be awarded to all key employees of
the Company and its subsidiaries and the number of options
previously granted and outstanding, as determined by the
Compensation Committee. Options granted in 1997 were
nonstatutory, have a term of ten years, and first become
exercisable one-third each year on the first, second and third
anniversary of the grant. No restricted stock grants were made
in 1997.
Compensation of the Chief Executive Officer
The Compensation Committee increased the base salary of
George E. Wardeberg, the Company's Chief Executive Officer, by
$35,000 or 8.8% effective April 1, 1997. The increase reflects
his overall performance, as demonstrated by record earnings for
the Company in 1996, an increase in earnings per share of 10% and
a total return of 17%, along with his position in the salary
range. The increase set Mr. Wardeberg's salary in the second
quartile of the range targeted by the Compensation Committee.
During July, 1997, Mr. Wardeberg was named the Company's
Chairman in addition to being Chief Executive Officer. In light
of the increased responsibilities, the Compensation Committee
increased his base salary by $35,000 or 8%, effective August 1,
1997.
The Compensation Committee awarded Mr. Wardeberg 20,000
nonstatutory stock options in 1997. The number of options awarded
was at the targeted number established in the long-term incentive
compensation plan.
20
The annual incentive award to Mr. Wardeberg for 1997 was
$185,200 or 42% of his salary as compared to a target of 50% of
salary. This award reflects Mr. Wardeberg's contributions to the
Company during 1997. The less than targeted incentive award was
caused by certain financial objectives which were not met. These
included the Company's return on capital at 8.2%, less than
targeted at 8.5% and earnings per share growth at 5%, less than
targeted at 10%. This was caused by the Company's manufacturing
operations falling short of a very aggressive target. Despite
this shortfall, manufacturing had an exceptionally strong year
with net earnings up 38% over the prior year. As a result,
WICOR's net earnings and earnings per share increased 6% and 5%,
respectively. WICOR outperformed its industry peers over the last
five years as shown in the accompanying Total Return Comparison
performance graph. In addition, Mr. Wardeberg accomplished many
of his personal objectives in the areas of growth, preserving the
Company's financial strength, and human resources which included
a successfully executed succession plan. The Compensation
Committee exercised its judgment in determining the weights
accorded to his accomplishment of these personal objectives.
Compliance with Tax Regulations
Under Section 162(m) of the Internal Revenue Code, the tax
deduction by corporate taxpayers, such as the Company, is limited
with respect to the compensation of certain executive officers
unless such compensation is based upon performance objectives
meeting certain regulatory criteria or is otherwise excluded from
the limitation. The Compensation Committee currently intends to
qualify compensation paid to the Company's executive officers for
deductibility by the Company under Section 162(m) of the Code.
Guy A. Osborn, Chairman
Wendell F. Bueche
Willie D. Davis
Daniel F. McKeithan, Jr.
Members of the Compensation Committee
PERFORMANCE PRESENTATION
The following graph compares the yearly percentage change in
the Company's cumulative total shareholder return (dividends
declared plus share appreciation) to the S&P 500 Stock Index and
the PaineWebber Gas Distribution Utility Index, comprised of 34
U.S. natural gas distribution utilities. The information
presented assumes that all dividends were reinvested.
[Performance graph will appear here.]
Total Return Comparison *
Among WICOR, Inc. S&P 500 Index
and PaineWebber Gas Distribution Utility Index
Measurement Period - FYE Measurement Point - December 31, 1992
1992 1993 1994 1995 1996 1997
-------- -------- -------- -------- -------- --------
WICOR $ 100 $ 121 $ 116 $ 139 $ 162 $ 218
S&P $ 100 $ 111 $ 112 $ 153 $ 188 $ 251
Industry $ 100 $ 114 $ 100 $ 130 $ 154 $ 198
* Includes Reinvested Dividends
** PaineWebber Gas Distribution Utility Index
21
ITEM NO. 2: APPROVAL OF THE 1994 LONG-TERM
PERFORMANCE PLAN, AS AMENDED
General
The Board has unanimously adopted three amendments to the
Company's 1994 Long-Term Performance Plan contingent upon
shareholder approval of such plan, as so amended, at the Annual
Meeting. The Long-Term Performance Plan, as amended, is referred
to herein as the "1994 Plan". The 1994 Plan provides for the
grant of options to purchase Common Stock, stock appreciation
rights ("SARs") and shares of restricted Common Stock to key
employees of the Company and its subsidiaries. The first
amendment to the 1994 Plan increases the authorized number of
shares for which awards may be made thereunder from 820,000 to
1,745,000. On February 17, 1998, without giving effect to the
amendment, only 155,990 shares of Common Stock remained available
for future awards under the 1994 Plan. The Board approved the
amendment increasing the number of shares for which awards may be
made under the 1994 Plan to provide the opportunity for
additional awards to be granted thereunder in the future.
The second amendment to the 1994 Plan modifies the
limitations on awards made to individual participants under the
1994 Plan. Without giving effect to the amendment, the 1994 Plan
provides that during the term of the Plan no participant may
receive grants that could result in the participant exercising
options for, or SARs with respect to, more than 125,000 shares of
Common Stock, or receiving restricted stock awards for more than
25,000 shares of Common Stock. As amended, the 1994 Plan
provides that no participant may receive awards in any calendar
year of options for, or SARs with respect to, more than 150,000
shares of Common Stock, or receive restricted stock awards in any
calendar year of more than 10,000 shares of Common Stock. The
modification of the individual limitations on awards is being
proposed both to reflect the increase in the number of authorized
shares under the 1994 Plan and to minimize the burden of
administering the 1994 Plan by changing the limitations to
calendar year restrictions as opposed to limitations for the term
of the 1994 Plan.
The third amendment modifies the criterion that must be
satisfied for restricted stock to vest. Without giving effect to
the amendment, the 1994 Plan provides that restricted stock
grants to Company executive officers and subsidiary chairmen and
presidents will vest if the Company attains, over a period of at
least three years, a specified compounded annual total return to
shareholders (stock price appreciation plus Company cash
dividends paid and assumed to be reinvested in Common Stock)
compared to a specified group of gas distribution utilities.
Restricted stock granted to other participants under the 1994
Plan prior to amendment would vest based on such conditions as
the Compensation Committee determined. As amended, the 1994 Plan
provides that restricted stock grants to all participants will
vest if the Company attains over a specified period a compounded
annual total return to shareholders fixed by the Compensation
Committee at the time of the grant. The Company remains
committed to permitting restricted stock to vest based on the
performance of the Company. However, as the Company's
manufacturing and non-utility energy-related businesses become
larger in size and of greater importance to the Company's overall
performance, the Board believes it is inappropriate to require
Company performance to be measured solely by comparison to gas
utility distribution companies.
22
The 1994 Plan was initially adopted by the Board effective
March 1, 1994, and was approved by shareholders on April 28,
1994. The 1994 Plan, as amended, was approved by the Board on
February 26, 1998. The 1994 Plan, as amended, is included as
Appendix A to this Proxy Statement. The description of the 1994
Plan set forth below is qualified in its entirety by reference to
Appendix A.
Purpose
The purpose of the 1994 Plan is to enhance the ability of the
Company and its affiliates to attract, retain and motivate key
salaried employees upon whom, in large measure, the sustained
growth and profitability of the Company depend, and to provide
incentive to those salaried employees that are more directly
linked to the profitability of the Company's businesses and
increases in shareholder value.
Administration
The 1994 Plan is administered by the Compensation Committee
(the "Committee") of the Board which consists of four non-
employee directors. Subject to the terms of the 1994 Plan, the
Committee has authority to interpret the 1994 Plan, prescribe,
amend and rescind rules and regulations relating to the 1994
Plan, and make all other determinations necessary or advisable
for the administration of the 1994 Plan.
Participation
The Committee selects participants in the 1994 Plan from
among key salaried employees of the Company and its affiliates.
The Committee solicits and considers recommendations of the Chief
Executive Officer in determining those key salaried employees who
will be eligible to participate in the 1994 Plan. Approximately
110 employees are currently eligible to participate in the 1994
Plan.
Stock Subject to the 1994 Plan
Assuming the 1994 Plan, as amended, is approved by the
shareholders, the maximum number of shares issuable thereunder
will be 1,745,000, subject to adjustment as described below.
Awards may be granted as options (either incentive stock options
or nonstatutory stock options), SARs or restricted stock. If any
shares covered by an award granted under the 1994 Plan, or to
which any award relates, are forfeited or if an award otherwise
terminates, expires or is canceled prior to the delivery of all
of the shares or of other consideration issuable or payable
pursuant to such award, and if such forfeiture, termination,
expiration or cancellation occurs prior to the payment of
dividends or the exercise by the holder of other indicia of
ownership of the shares to which the award relates, then the
number of shares counted against the number of shares available
under the 1994 Plan in connection with the grant of such award,
to the extent of any such forfeiture, termination, expiration or
cancellation, will again be available for granting of additional
awards under the 1994 Plan. Notwithstanding the foregoing, if a
new award for additional shares is granted to a participant in
connection with such an expiration, forfeiture, cancellation or
termination, then the shares subject to the expiration,
forfeiture, cancellation or termination will reduce the number of
shares that can otherwise be issued under the 1994 Plan. Shares
to be issued under the 1994 Plan may be either authorized but
unissued or treasury shares.
23
In the event of any change in the outstanding shares of
Common Stock by reason of a stock dividend or split,
recapitalization, merger, consolidation, combination, spin-off,
exchange of shares or other similar corporate change, the number
of shares subject to outstanding options and their stated option
prices, and the number of shares subject to the 1994 Plan, will
be adjusted equitably by the Committee. In such event, the
Committee will also adjust equitably the number of shares subject
to restricted stock grants and the number of outstanding SARs and
related grant values.
Options
Options may be granted to participants at such times as
determined by the Committee. The Committee will also determine
the number of options granted and whether an option is to be an
incentive stock option or nonstatutory stock option. Pursuant to
the Internal Revenue Code, the aggregate fair market value of
Common Stock with respect to which incentive stock options are
exercisable for the first time by a participant during any
calendar year shall not exceed $100,000. The option price per
share of Common Stock will be fixed by the Committee, but will
not be less than the fair market value of the Common Stock on the
date of grant and cannot be subsequently changed except as noted
above. No option shall be granted, directly or indirectly, in
connection with the expiration, forfeiture, cancellation or
termination of an option previously granted under the 1994 Plan
prior to its normal expiration date if such expired, forfeited,
canceled or terminated option had an exercise price higher than
the exercise price of the option proposed to be granted. The
Committee will determine the expiration date of each option, but
the expiration date will not be later than the tenth anniversary
of the grant date. Options will be exercisable at such times and
be subject to such restrictions and conditions as the Committee
deems necessary or advisable. No options will be assignable or
transferable by a participant, except by will or the laws of
descent and distribution and may be exercised during the life of
the participant only by the participant.
At the time of exercise, the option price must be paid in
full. The Committee will determine the form of payment, which
may include either (i) cash; (ii) tendering shares of Common
Stock having a fair market value at the time of exercise equal to
the option price; (iii) electing to have the Company withhold
from shares of Common Stock otherwise issuable upon exercise that
number of shares of stock having a fair market value at the time
of exercise equal to the option price; (iv) a combination of (i),
(ii) and (iii); or (v) such other form of payment as the
Committee determines. The Committee may permit the practice known
as "pyramiding" whereby shares of Common Stock acquired upon
exercise of an option are simultaneously surrendered in exchange
for all or part of the remaining shares subject to the option.
Stock Appreciation Rights
The Committee may also grant SARs under the 1994 Plan,
independently or in tandem with a related option, giving the
participant the right to receive a payment (in cash, shares of
Common Stock, or a combination thereof as the Committee shall
determine) equal to the excess of the fair market value of a
share of Common Stock at the date of exercise over the exercise
price.
SARs granted in tandem with options will be exercisable at
such times, on such conditions and to the extent that the related
option may be exercised.
24
Restricted Stock
The Committee may grant shares of restricted stock to
participants in such amounts and at such times as it determines.
Under the 1994 Plan, as amended, restricted stock awards will
vest based on attaining a specified compounded annual total
shareholder return (stock price appreciation plus Company cash
dividends paid and assumed to be reinvested in Common Stock).
Shares of restricted stock may not be transferred in any way,
other than by will or by the laws of descent and distribution,
for the period of restriction. After the period of restriction,
the shares of restricted stock become freely transferable.
The Committee may impose such other restrictions on
restricted stock as it may deem appropriate. If any dividends or
distributions are paid in shares of capital stock, the shares
will be subject to the same restrictions on transferability as
the shares on which the dividends or distributions are paid.
Tax Withholding
Whenever shares of Common Stock are to be issued under the
1994 Plan, the Company may withhold from any cash otherwise
payable to the participant or require the participant to remit to
the Company an amount sufficient to satisfy federal, state and
local withholding taxes. Unless the Committee determines
otherwise, a participant may satisfy such withholding
requirements by tendering already owned shares of Common Stock or
requesting that the Company withhold shares of Common Stock
issuable in connection with the award.
Certain Federal Income Tax Consequences
Stock Options. The grant of an option under the 1994 Plan
creates no income tax consequences to the employee or the
Company. An employee who is granted a nonstatutory stock option
will generally recognize ordinary income at the time of exercise
in an amount equal to the excess of the fair market value of the
Common Stock at such time over the exercise price. The Company
will be entitled to a deduction in the same amount and at the
same time as ordinary income is recognized by the employee. A
subsequent disposition of the Common Stock will give rise to
capital gain or loss to the extent the amount realized from the
sale differs from the tax basis, i.e., the fair market value of
the Common Stock on the date of exercise. This capital gain or
loss will be short-term, mid-term or long-term capital gain or
loss depending on the holding period.
In general, an employee will recognize no income or gain at
the time of exercise of an incentive stock option (except that
the alternative minimum tax may apply). If the employee holds
the shares of Common Stock acquired pursuant to the exercise of
an incentive stock option for at least two years from the date of
grant and one year from the date of exercise, any gain or loss
realized by the employee on the disposition of the Common Stock
will be treated as a long-term or mid-term capital gain or loss
depending on the holding period. No deduction will be allowed to
the Company. If these holding period requirements are not
satisfied, the employee will recognize ordinary income at the
time of the disposition equal to the lesser of (i) the gain
realized on the disposition; or (ii) the difference between the
exercise price and the fair market value of the shares of Common
Stock on the date of exercise. Any gain realized by the employee
over the fair market value at the time of exercise will be
treated as a capital gain which will be a short-term, mid-term or
long-term capital gain depending on the holding period. The
Company will be entitled to a deduction in the same amount and at
the same time as ordinary income is recognized by the employee.
The Committee may provide for a sharing between the Company and
the participant of any tax benefits to the Company arising from
such disqualifying disposition.
25
Stock Appreciation Rights. The grant of an SAR will create
no income tax consequences for the employee or the Company. Upon
exercise of an SAR, the employee will recognize ordinary income
equal to the amount of any cash and the fair market value of any
shares of Common Stock or other property received, except that if
the employee receives restricted stock upon exercise of an SAR,
recognition of income may be deferred in accordance with the
rules applicable to such an award. The Company will be entitled
to a deduction in the same amount and at the same time as income
is recognized by the employee.
Restricted Stock. An employee will not recognize income upon
the award of restricted stock under the 1994 Plan unless the
election described below is made. However, an individual who has
not made such an election will recognize ordinary income at the
time the restrictions lapse in an amount equal to the fair market
value of the restricted stock at such time. The Company will be
entitled to a corresponding deduction in the same amount and at
the same time as the participant recognizes income. Any
otherwise taxable disposition of the restricted stock after the
restrictions lapse will result in capital gain or loss (short-
term, mid-term or long-term depending on the length of time the
restricted stock is held after the restrictions lapse).
Dividends paid in cash and received by a participant prior to
time the restrictions lapse will constitute ordinary income to
the participant, and the Company will be entitled to a
corresponding deduction for such dividends. Any dividends paid
in stock will be treated as an award of additional restricted
stock subject to the tax treatment described above.
An employee may, within 30 days after the date of the award
of restricted stock, elect to recognize ordinary income as of the
date of the award in an amount equal to the fair market value of
such restricted stock on the date of the award. The Company will
be entitled to a corresponding deduction in the same amount and
at the same time as the participant recognizes income. If the
election is made, any cash dividends received with respect to the
restricted stock will be treated as dividend income to the
participant in the year of payment and will not be deductible by
the Company. Any otherwise taxable disposition of the restricted
stock (other than by forfeiture) will result in capital gain or
loss (long-term or short-term depending on the holding period).
If the participant who has made an election subsequently forfeits
the restricted stock, the participant will not be entitled to
deduct the amount previously included in income as a loss. The
Company would then be required to include as ordinary income the
amount of the deduction it originally claimed with respect to
such shares.
26
Outstanding Future Awards
On February 17, 1998, the Committee granted Options and
restricted stock to participants effective as of the date of the
Annual Meeting, assuming shareholder approval of the 1994 Plan,
as amended. The Options will have a per-share exercise price
equal to the fair market value of a share of Common Stock on the
effective date of the grant. On February 27, 1998, the closing
per-share price of Common Stock on the New York Stock Exchange
was $47.8175. The following tabulation sets out the grants of
stock options and restricted stock to participants.
NEW PLAN BENEFITS
1994 Long-Term Performance Plan
Number of Shares Number of Shares of
Name and Position Subject to Options Restricted Stock
- --------------------- ------------------ -------------------
George E. Wardeberg 100,000 3,600
Chairman and Chief
Executive Officer
Thomas F. Schrader 30,000 2,000
President and Chief
Operating Officer
James C. Donnelly 20,000 1,500
Vice President
Joseph P. Wenzler 20,000 1,500
Senior Vice President,
Treasurer and Chief
Financial Officer
Robert A. Nuernberg 2,000 400
Secretary
Executive Group 192,000 9,000
Non-Executive 155,100 9,700
Officer Group
Except as set forth in the table, the Company cannot
currently determine awards that may be made to eligible
participants under the 1994 Plan, as amended. Such determination
will be made from time to time by the Committee.
Duration of Plan
The 1994 Plan will remain in effect until all Common Stock
subject to it has been purchased or acquired, unless terminated
earlier by the Board. However, no option, SAR or restricted
stock may be granted after March 1, 2004.
27
Amendment, Modification and Termination
The Board may amend, modify or terminate the 1994 Plan at any
time, provided that no such action of the Board, without approval
of the shareholders, may (i) increase the maximum number of
shares issuable under the 1994 Plan or the maximum number of
shares which can be awarded to any participant; (ii) modify the
performance criteria pursuant to which restricted stock vests;
(iii) materially modify the eligibility requirements for
participation in the 1994 Plan; or (iv) materially increase the
benefits to participants under the 1994 Plan. Termination,
amendment or modification of the 1994 Plan will not adversely
affect the right of participants under options, SARs or
restricted stock previously granted, without the consent of the
participant.
Vote Required for Approval
The affirmative vote of a majority of the votes cast on the
proposal by shareholders is required for approval of the 1994
Plan, as amended, provided that a majority of the outstanding
shares of Common Stock are voted on the proposal. Assuming such
proviso is met, any shares not voted (whether by broker non-vote
or otherwise, except abstentions) will have no impact on the
vote. Shares as to which shareholders abstain from voting will be
treated as votes against the 1994 Plan, as amended. The shares
represented by the proxies received will be voted FOR approval of
the 1994 Plan, as amended, unless a vote against such approval or
to abstain from voting is specifically indicated on the proxy.
In the event that the 1994 Plan, as amended, is not approved by
the shareholders at the Annual Meeting, the 1994 Plan (without
giving effect to the amendments described above) will remain in
full force and effect.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" APPROVAL OF
THE 1994 PLAN, AS AMENDED, ITEM NO.2. PROXIES SOLICITED BY THE
BOARD WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY A DIFFERENT
CHOICE.
SHAREHOLDER PROPOSALS
Proposals which shareholders of the Company intend to present
at and have included in the Company's proxy statement for the
1999 Annual Meeting of Shareholders must be received by the
Company by the close of business on November 13, 1998.
OTHER MATTERS
Arthur Andersen LLP was retained as the Company's independent
auditors for the year ended December 31, 1997 and, upon the
recommendation of the Audit Committee, the Board has reappointed
Arthur Andersen as independent public accountants for the Company
for the year ending December 31, 1998. A representative of
Arthur Andersen is expected to be present at the Annual Meeting
with the opportunity to make a statement if such representative
desires to do so, and it is expected that such representative
will be available to respond to appropriate questions.
28
The Company will file with the Securities and Exchange
Commission on or before March 31, 1998, an annual report on Form
10-K for the fiscal year ended December 31, 1997. The Company
will provide without charge a copy of this Form 10-K (including
financial statements and financial statement schedules, but not
including exhibits thereto) to each person who is a record or
beneficial holder of shares of Common Stock as of the record date
for the Annual Meeting and who submits a written request for it.
A request for a Form 10-K should be addressed to Robert A.
Nuernberg, Secretary, WICOR, Inc., P.O. Box 334, Milwaukee,
Wisconsin 53201.
Management does not intend to present to the Annual Meeting
any matters other than the matters described in this Proxy
Statement. Management knows of no other matters to be brought
before the Annual Meeting. However, if any other matters are
properly brought before the Annual Meeting, it is the intention
of the persons named in the enclosed form of proxy to vote
thereon in accordance with their best judgment.
The cost of soliciting proxies will be borne by the Company.
The Company expects to solicit proxies primarily by mail.
Proxies may also be solicited personally and by telephone by
certain officers and regular employees of the Company and its
subsidiaries. The Company has also retained ChaseMellon
Shareholder Services to assist in the solicitation of proxies,
and expects to pay such firm a fee of approximately $4,750, plus
out-of-pocket expenses. The Company may reimburse brokers and
other nominees for their expenses in communicating with the
persons for whom they hold Common Stock.
By Order of the Board of Directors
Robert A. Nuernberg
Secretary
March 13, 1998
29
APPENDIX A
WICOR, INC.
1994 LONG-TERM PERFORMANCE PLAN
(as proposed to be amended)
Proposed additions to Section 4(a)(i), Section 4(a)(ii) and
Section 6(c)(iii) of the Company's 1994 Long-Term Performance
Plan that would be effected if the shareholders approve the 1994
Plan, as amended, have been underlined and proposed deletions
have been indicted by overstriking.
Section 1. Purpose
The purpose of the WICOR, Inc. 1994 Long-Term Performance
Plan (the "Plan") is to enhance the ability of WICOR, Inc.
(together with any successor thereto, the "Company") and its
Affiliates (as defined below) to attract, retain and motivate key
salaried employees upon whom, in large measure, the sustained
growth and profitability of the Company depend and to provide
incentives to such key salaried employees which are more directly
linked to the profitability of the Company's businesses and
increases in shareholder value.
Section 2. Definitions
As used in the Plan, the following terms shall have the
respective meanings set forth below:
- "Affiliate" shall mean any entity that, directly or through
one or more intermediaries, is controlled by, controls, or is
under common control with, the Company.
- "Award" shall mean any Option, Stock Appreciation Right or
Restricted Stock granted under the Plan.
- "Award Agreement" shall mean any written agreement,
contract, or other instrument or document evidencing any Award
granted under the Plan.
- "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
- "Commission" shall mean the United States Securities and
Exchange Commission or any successor agency.
- "Committee" shall mean a committee of the Board of
Directors of the Company designated by such Board to administer
the Plan and composed of not less than two directors, each of
whom is a "non-employee director" within the meaning of Rule 16b-3.
- "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
- "Fair Market Value" shall mean, with respect to any
property (including, without limitation, any Shares or other
securities), the fair market value of such property determined by
such methods or procedures as shall be established from time to
time by the Committee.
- "Incentive Stock Option" shall mean an Option granted
under Section 6(a) of the Plan that is intended to meet the
requirements of Section 422 of the Code, or any successor
provision thereto.
- "Key Salaried Employee" shall mean any officer or other
key salaried employee of the Company or of an Affiliate who is
responsible for or contributes to the management, growth or
profitability of the business of the Company or any Affiliate as
determined by the Committee.
- "Non-Qualified Stock Option" shall mean an Option granted
under Section 6(a) of the Plan that is not intended to be an
Incentive Stock Option.
- "Option" shall mean an Incentive Stock Option or a Non-
Qualified Stock Option.
30
- "Participant" shall mean a Key Salaried Employee
designated to be granted an Award under the Plan.
- "Person" shall mean any individual, corporation,
partnership, association, limited liability company, joint-stock
company, trust, unincorporated organization, or government or
political subdivision thereof.
- "Released Securities" shall mean Shares of Restricted
Stock with respect to which all applicable restrictions have
expired, lapsed, or been waived.
- "Restricted Securities" shall mean Awards of Restricted
Stock or other Awards under which issued and outstanding Shares
are held subject to certain restrictions.
- "Restricted Stock" shall mean any Shares granted under
Section 6(c)of the Plan.
- "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the
Commission under the Exchange Act, or any successor rule or
regulation thereto.
- "Shares" shall mean shares of common stock of the Company
and such other securities or property as may become subject to
Awards pursuant to an adjustment made under Section 4(b) of the
Plan.
- "Stock Appreciation Right" shall mean any right granted
under Section 6(b) of the Plan.
- "Total Shareholder Return" shall mean the appreciation of
the price of a share of common stock of the Company, plus the
value of dividends paid thereon assuming reinvestment in common
stock of the Company.
Section 3. Administration
The Plan shall be administered by the Committee; provided,
however, that if at any time the Committee shall not be in
existence, the functions of the Committee as specified in the
Plan shall be exercised by those members of the Board of
Directors of the Company who qualify as "non-employee directors"
under Rule 16b-3. Subject to the terms of the Plan and
applicable law, the Committee shall have full power and authority
to: (i) designate Participants; (ii) determine the type or types
of Awards to be granted to each Participant under the Plan; (iii)
determine the number of Shares to be covered by (or with respect
to which payments, rights, or other matters are to be calculated
in connection with) Awards granted to Participants; (iv)
determine the terms and conditions of any Award granted to a
Participant; (v) determine whether, to what extent, and under
what circumstances Awards granted to Participants may be settled
or exercised in cash, Shares, other securities, other Awards, or
other property, or canceled, forfeited, or suspended to the
extent permitted in Section 7 of the Plan, and the method or
methods by which Awards may be settled, exercised, canceled,
forfeited, or suspended; (vi) determine whether, to what extent,
and under what circumstances cash, Shares, other securities,
other Awards, other property, and other amounts payable with
respect to an Award granted to Participants under the Plan shall
be deferred either automatically or at the election of the holder
thereof or of the Committee; (vii) interpret and administer the
Plan and any instrument or agreement relating to, or Award made
under, the Plan (including, without limitation, any Award
Agreement); (viii) establish, amend, suspend, or waive such rules
and regulations and appoint such agents as it shall deem
appropriate for the proper administration of the Plan; and (ix)
make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of
the Plan. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other
decisions under or with respect to the Plan or any Award shall be
within the sole discretion of the Committee, may be made at any
time, and shall be final, conclusive, and binding upon all
Persons, including the Company, any Affiliate, any Participant,
any holder or beneficiary of any Award, any shareholder, and any
employee of the Company or of any Affiliate.
31
The Committee shall solicit and consider the recommendations
of the Chief Executive Officer of the Company with regard to,
among other things, the designation of Participants, the type of
Awards to be granted under the Plan to such Participants and the
number of Shares to be subject thereto, and the other terms and
conditions of Awards granted to Participants, subject to the
limitations of Rule 16b-3.
Section 4. Shares Available for Award
(a) Shares Available. Subject to adjustment as provided in
Section 4(b):
(i) Number of Shares Available. The total number of
Shares with respect to which Awards may be granted under the Plan
shall be 820,000 1,745,000. If, after the effective date of the
Plan, any Shares covered by an Award granted under the Plan, or
to which any Award relates, are forfeited or if an Award
otherwise terminates, expires or is canceled prior to the
delivery of all of the Shares or of other consideration issuable
or payable pursuant to such Award and if such forfeiture,
termination, expiration or cancellation occurs prior to the
payment of dividends or the exercise by the holder of other
indicia of ownership of the Shares to which the Award relates,
then the number of Shares counted against the number of Shares
available under the Plan in connection with the grant of such
Award, to the extent of any such forfeiture, termination,
expiration or cancellation, shall again be available for granting
of additional Awards under the Plan; provided, however, that if
an Award covering additional Shares is granted to a Participant
in connection with such forfeiture, termination, expiration or
cancellation, then the Shares subject to the forfeiture,
termination, expiration or cancellation shall be counted against
the total number of Shares with respect to which Awards may be
granted under the Plan and the maximum number of Shares that may
be the subject of Awards granted to individual Participants under
the Plan in an amount equal to the number of Shares to which such
additional grant relates.
(ii) Limitation on Awards to Individual Participants. No
During any one calendar year, no Participant shall be granted
Awards that could result in such Participant exercising of
Options for, or Stock Appreciation Rights with respect to, more
than 125,000 150,000 Shares or receiving receive more than 25,000
10,000 Shares of Restricted Stock under the Plan.
(iii) Accounting for Awards. The number of Shares
covered by an Award under the Plan, or to which such Award
relates, shall be counted on the date of grant of such Award
against the number of Shares available for granting Awards under
the Plan; provided, however, that if Options and Stock
Appreciation Rights are granted in tandem and the exercise of
either an Option or Stock Appreciation Right results in an
offsetting reduction in the number of Options or Stock
Appreciation Rights subject to the Award, then the number of
Shares to which such Award relates shall only be counted against
the number of Shares available for granting Awards under the Plan
to the extent of the aggregate number of Shares as to which such
Award may be exercised.
(iv) Sources of Shares Deliverable Under Awards. Any
Shares delivered pursuant to an Award may consist, in whole or in
part, of authorized and unissued Shares or of treasury Shares.
32
(b) Adjustments. In the event that the Company shall pay
a dividend on its common stock in Shares, effect a stock split,
or effect a similar corporate transaction or event that affects
the Shares such that an adjustment is determined by the Committee
to be appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available
under the Plan, then the number of Shares subject to the Plan and
which thereafter may be made the subject of Awards and the number
of Shares subject to outstanding Awards under the Plan, and the
exercise and grant prices thereof, shall be equitably adjusted by
the Committee such that the number of Shares, as adjusted, shall
bear the same relation to the total number of outstanding shares
of common stock of the Company following the transaction or event
as immediately prior to such transaction or event; provided,
however, that the number of Shares subject to any Award payable
or denominated in Shares shall always be a whole number.
Section 5. Eligibility
Any Key Salaried Employee, including any executive officer or
employee who is also a director of the Company or of any
Affiliate, who is not a member of the Committee shall be eligible
to be designated a Participant.
Section 6. Awards
(a) Options. The Committee is hereby authorized to grant
Options to Participants with the terms and conditions as set
forth below and with such additional terms and conditions, in
either case not inconsistent with the provisions of the Plan, as
the Committee shall determine; provided, however, that no Option
shall be granted, directly or indirectly, in connection with the
forfeiture, termination, cancellation or expiration of an Option
previously granted under the Plan prior to its normal expiration
date if such forfeited, terminated, canceled or expired Option
has an exercise price higher than the Option proposed to be
granted.
(i) Exercise Price. The exercise price per share under
an Option shall be determined by the Committee; provided,
however, that such exercise price shall not be less than 100% of
the Fair Market Value of a Share on the date of grant of such
Option; and provided further, that such exercise price shall not
be adjusted following the date of grant of such Option except as
provided in Section 4(b) hereof.
(ii) Option Term. The term of each Option shall be fixed
by the Committee; provided, however, that in no event shall the
term of any Option exceed a period of ten years from the date of
its grant.
(iii) Exercisability and Method of Exercise. An Option
shall become exercisable in such manner and within such period or
periods and in such installments or otherwise as shall be
determined by the Committee. The Committee also shall determine
the method or methods by which, and the form or forms, including,
without limitation, cash, Shares, other securities, other Awards,
or other property, or any combination thereof, having a Fair
Market Value on the exercise date equal to the relevant exercise
price, in which payment of the exercise price with respect to any
Option may be made or deemed to have been made.
(iv) Incentive Stock Options. The terms of any Incentive
Stock Option granted under the Plan shall comply in all respects
with the provisions of Section 422 of the Code, or any successor
provision thereto, and any regulations promulgated thereunder.
33
(b) Stock Appreciation Rights. The Committee is hereby
authorized to grant Stock Appreciation Rights to Participants.
Subject to the terms of the Plan and any applicable Award
Agreement, a Stock Appreciation Right granted under the Plan
shall confer on the holder thereof a right to receive, upon
exercise thereof, the excess of (i) the Fair Market Value of one
Share on the date of exercise over (ii) the grant price of the
right as specified by the Committee, which shall not be less than
the Fair Market Value of one Share on the date of grant of the
Stock Appreciation right. Subject to the terms of the Plan, the
grant price, term, methods of exercise, methods of settlement
(including whether the Participant will be paid in cash or
Shares, or a combination thereof), and any other terms and
conditions of any Stock Appreciation Right shall be as determined
by the Committee; provided, however, that the grant price of a
Stock Appreciation Right may not be adjusted following the date
of grant of such Stock Appreciation Right except as provided in
Section 4(b) hereof. The Committee may impose such conditions or
restrictions on the exercise of any Stock Appreciation Right as
it may deem appropriate, including, without limitation,
restricting the time of exercise of the Stock Appreciation Right
to specified periods as may be necessary to satisfy the
requirements of Rule 16b-3.
(c) Restricted Stock Awards
(i) Issuance. The Committee is hereby authorized to
grant Awards of Restricted Stock to Participants.
(ii) Restrictions. Shares of Restricted Stock granted to
Participants shall be subject to such restrictions as the
Committee may impose, which restrictions may lapse separately or
in combination at such time or times, in such installments or
otherwise, as the Committee may deem appropriate.
(iii) Performance Criteria. The restrictions applicable
to Company executives and the Chairman and President of each
subsidiary of the Company Participants shall be based on the
criteria of attaining over a period of at least three years a
compounded annual percentage rate of Total Shareholder Return
compared to a specified group of gas distribution utilities. The
restrictions applicable to other executives of the subsidiaries
shall be as determined by the Committee.
(iv) Registration. Any Restricted Stock granted under the
Plan to a Participant may be evidenced in such manner as the
Committee may deem appropriate. In the event any stock
certificate is issued in respect of Shares of Restricted Stock
granted under the Plan to a Participant, such certificate shall
be registered in the name of the Participant and shall bear an
appropriate legend (as determined by the Committee) referring to
the terms, conditions, and restrictions applicable to such
Restricted Stock.
(v) Payment of Restricted Stock. At the end of the
applicable restriction period relating to Restricted Stock
granted to a Participant, one or more stock certificates for the
appropriate number of Shares, free of restrictions, shall be
delivered to the Participant, or, if the Participant received
stock certificates representing the Restricted Stock at the time
of grant, the legends placed on such certificates shall be
remove.
(vi) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment of a Participant (as
determined under criteria established by the Committee) for any
reason during the applicable restriction period, all Shares of
Restricted Stock still subject to restriction shall be forfeited
by the Participant and reacquired by the Company.
34
(d) General.
(i) No Consideration for Awards. Awards shall be granted
to Participants for no cash consideration unless otherwise
determined by the Committee.
(ii) Award Agreements. Each Award granted under the Plan
shall be evidenced by an Award Agreement in such form (consistent
with the terms of the Plan) as shall have been approved by the
Committee.
(iii) Awards May Be Granted Separately or Together.
Awards to Participants under the Plan may be granted either alone
or in addition to, in tandem with, or in substitution for any
other Award or any award granted under any other plan of the
Company or any Affiliate. Awards granted in addition to or in
tandem with other Awards, or in addition to or in tandem with
awards granted under any other plan of the Company or any
Affiliate, may be granted either at the same time as or at a
different time from the grant of such other Awards or awards.
(iv) Limits on Transfer of Awards. No Award (other than
Released Securities), and no right under any such Award, shall be
assignable, alienable, salable, or transferable by a Participant
otherwise than by will or by the laws of descent and distribution
(or, in the case of an Award of Restricted Securities, to the
Company); provided, however, that a Participant at the discretion
of the Committee may be entitled, in the manner established by
the Committee, to designate a beneficiary or beneficiaries to
exercise his or her rights, and to receive any property
distributable, with respect to any Award upon the death of the
Participant. Each Award, and each right under any Award, shall
be exercisable, during the lifetime of the Participant, only by
such individual or, if permissible under applicable law, by such
individual's guardian or legal representative. No Award (other
than Released Securities), and no right under any such Award, may
be pledged, alienated, attached, or otherwise encumbered, and any
purported pledge, alienation, attachment, or encumbrance thereof
shall be void and unenforceable against the Company or any
Affiliate.
(v) Term of Awards. Except as otherwise provided in the
Plan, the term of each Award shall be for such period as may be
determined by the Committee.
(vi) Rule 16b-3 Six-Month Limitations. To be extent
required in order to comply with Rule 16b-3 only, any equity
security offered pursuant to the Plan may not be sold for at
least six months after acquisition, except in the case of death
or disability, and any derivative security issued pursuant to the
Plan shall not be exercisable for at least six months, except in
case of death or disability of the holder thereof. Terms used in
the preceding sentence shall, for the purposes of such sentence
only, have the meanings, if any, assigned or attributed to them
under Rule 16b-3.
(vii) Share Certificates; Representation by
Participants. In addition to the restrictions imposed pursuant
to Section 6(c) hereof, all certificates for Shares delivered
under the Plan pursuant to any Award or the exercise thereof
shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan
or the rules, regulations, and other requirements of the
Commission, any stock exchange or other market upon which such
Shares are then listed or traded, and any applicable federal or
state securities laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate
reference to such restrictions. The Committee may require each
Participant or other Person who acquires Shares under the Plan by
means of an Award originally made to a Participant to represent
to the Company in writing that such Participant or other Person
is acquiring the Shares without a view to the distribution
thereof.
35
Section 7. Amendment and Termination; Waiver of Conditions
(a) Amendments to the Plan. The Board of Directors of
the Company may amend, alter, suspend, discontinue, or terminate
the Plan at any time; provided, however, that no amendment,
alteration, suspension, discontinuation or termination of the
Plan shall in any manner (except as otherwise provided in this
Section 7) adversely affect any Award granted and then
outstanding under the Plan without the consent of the
Participant; provided further that, notwithstanding any other
provision of the Plan or any Award Agreement, without the
approval of the shareholders of the Company, no amendment,
alterations, suspension, discontinuation, or termination of the
Plan shall be made that would:
(i) increase the total number of Shares available for
Awards under the Plan or the maximum number of Shares with
respect to which Awards may be made to individual Participants,
except as provided in Section 4(b) hereof;
(ii) modify the performance criteria pursuant to which
Restricted Stock vests;
(iii) materially increase the benefits accruing to
Participants under the Plan; or
(iv) Materially modify the requirements as to eligibility
for participation in the Plan.
(b) Adjustments of Awards Upon Certain Acquisitions. In
the event the Company or any Affiliate shall assume outstanding
employee awards or the right or obligation to make future such
awards in connection with the acquisition of another business or
another corporation or business entity, the Committee may make
such adjustments, not inconsistent with the terms of the Plan, in
the terms of Awards granted to Participants as it shall deem
appropriate in order to achieve reasonable comparability or other
equitable relationship between the assumed awards and the Awards
granted under the Plan to Participants as so adjusted.
(C) Correction of Defects, Omissions, and
Inconsistencies. The Committee may correct any defect, supply
any omission, or reconcile any inconsistency in any Award or
Award Agreement in the manner and to the extent it shall deem
necessary or desirable to carry the Plan into effect.
Section 8. General Provisions
(a) No Rights to Awards. No Key Salaried Employee,
Participant or other Person shall have any claim to be granted
any Award under the Plan, and there is no obligation for
uniformity of treatment of Key Salaried Employees, Participants,
or holders or beneficiaries of Awards under the Plan. The terms
and conditions of Awards need not be the same with respect to
each Participant.
(b) Withholding. No later than the date as of which an
amount first becomes includible in the gross income of a
Participant for federal income tax purposes with respect to any
Award under the Plan, the Participant shall pay to the Company,
or make arrangements satisfactory to the Company regarding the
payment of, any federal, state, local or foreign taxes of any
kind required by law to be withheld with respect to such amount.
Unless otherwise determined by the Committee, withholding
obligations arising with respect to Awards to Participants under
the Plan may be settled with Shares (other than Restricted
Securities), including Shares that are part of, or are received
upon exercise of, the Award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall
be conditional on such payment or arrangements, and the Company
and any Affiliate shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment otherwise due to
the Participant. The Committee may establish such procedures as
it deems appropriate for the settling of withholding obligations
with Shares, including, without limitation, the establishment of
such procedures as may be necessary to satisfy the requirements
of Rule 16b-3.
36
(c) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company or any Affiliate
from adopting or continuing in effect other or additional
compensation arrangements, and such arrangements may be either
generally applicable or applicable only in specific cases.
(d) Rights and Status of Recipients of Awards. The grant
of an Award shall not be construed as giving a Participant the
right to be retained in the employ of the Company or any
Affiliate. Further, the Company or any Affiliate may at any time
dismiss a Participant from employment, free from any liability,
or any claim under the Plan. Except for rights accorded under
the Plan and under any applicable Award Agreement, Participants
shall have no rights as holders of Shares as a result of the
granting of Awards hereunder.
(e) Unfunded Status of the Plan. Unless otherwise
determined by the Committee, the Plan shall be unfunded and shall
not create (or be construed to create) a trust or a separate fund
or funds. The Plan shall not establish any fiduciary relationship
between the Company and any Participant or other Person. To the
extent any Person holds any right by virtue of a grant under the
Plan, such right (unless otherwise determined by the Committee)
shall be no greater than the right of an unsecured general
creditor of the Company.
(f) Governing Law. The validity, construction, and
effect of the Plan and any rules and regulations relating to the
Plan shall be determined in accordance with the internal laws of
the State of Wisconsin and applicable federal law.
(g) Severability. If any provision of the Plan or any
Award Agreement or any Award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction, or as to
any Person or Award, or would disqualify the Plan, any Award
Agreement or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to
conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan, any Award Agreement
or the Award, such provision shall be stricken as to such
jurisdiction, Person, or Award, and the remainder of the Plan,
any such Award Agreement and any such Award shall remain in full
force and effect.
(h) No Fractional Shares. No fraction Shares or other
securities shall be issued or delivered pursuant to the Plan, any
Award Agreement or any Award, and the Committee shall determine
(except as otherwise provided in the Plan) whether cash, other
securities, or other property shall be paid or transferred in
lieu of any fractional Shares or other securities or any rights
thereto shall be canceled, terminated, or otherwise eliminated.
(i) Headings. Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material
or relevant to the construction or interpretation of the Plan or
any provision thereof.
Section 9. Effective Date of the Plan
The Plan shall be effective as of March 1, 1994, subject,
however, to the approval of the plan by the shareholders of the
Company at the next annual meeting of shareholders, or any
adjournment thereof, within twelve months following the date of
adoption of the Plan by the Board of Directors of the Company.
37
Section 10. Term of the Plan
No Award shall be granted under the Plan after March 1, 2004.
However, unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award theretofore granted may
extend beyond such date, and, to the extent set forth in the
Plan, the authority of the Committee to amend, alter, adjust,
suspend, discontinue, or terminate any such award, or to waive
any conditions or restrictions with respect to any such Award,
and the authority of the Board of Directors of the Company to
amend the Plan, shall extend beyond such date.
38
APPENDIX B
WICOR
VOTING AUTHORIZATION
[X] Please mark your
votes as this
- ----------------------------------------------------------------------------
The Board of Directors recommends a vote FOR all nominees
in Item 1 AND for ITEM 2..
- ----------------------------------------------------------------------------
1. Election of the following nominees as directors for three-year terms:
Wendell F. Bueche, Daniel F. McKeithan, Jr., George E. Wardeberg
and Essie M. Whitelaw
FOR all nominees WITHHOLD
(except as marked AUTHORITY
to the contrary) to vote for all nominees
/ / / /
(Instruction: To withhold authority to vote
for any nominee write the name below)
2. To approve and adopt the 1994 Long-Term Performance Plan, as amended.
For Against Abstain
/ / / / / /
-------------------------------------------
. . . . . . . . . . . . . . . . . . . . . .
. .
. .
. .
. . This Voting Authoriza-
. . tion is Solicited by the
. . Board of Directors
. . . . . . . . . . . . . . . . . . . . . .
Signature(s) _________________________________ Date ________________
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
39
FOLD AND DETACH HERE
March 13, 1998
Dear WICOR Employee Shareholder:
Enclosed is a notice of WICOR's annual shareholders meeting, coming up
April 23, 1998, in Milwaukee. Also enclosed is a proxy statement, voting
authorization card and WICOR 1997 annual report.
It's important that you fill out and return the authorization card as soon
as possible. It entitles you, as an owner of WICOR common stock through our
company's savings plans, to vote your interest at the annual meeting.
Filing out the card directs the Trustee of your shares held in the savings
plan as of February 23, 1998, to vote them on your behalf. You must return
your marked and signed card in order to have the Trustee vote your shares.
The WICOR Board of Directors urges you to exercise this right to vote. To
make sure your vote counts, and to prevent the expense of WICOR sending
further reminder notices, please mark and sign your voting authorization
card now and return it to the Trustee in the enclosed envelope.
Thank you,
Sincerely,
George E. Wardeberg
President and Chief Executive Officer
YOUR VOTE IS IMPORTANT. TO ASSURE YOUR REPRESENTATION AT THE WICOR
SHAREHOLDERS ANNUAL MEETING, MARK YOUR VOTES ON THE ENCLOSED VOTING
AUTHORIZATION CARD, DATE IT, SIGN IT EXACTLY AS YOUR NAME APPEARS AND RETURN
IT TODAY IN THE ENCLOSED ENVELOPE.
40
--- (BACKSIDE OF VOTER AUTHORIZATION FORM) ---
WICOR
VOTING AUTHORIZATION
The undersigned acknowledges receipt of the WICOR, Inc. Annual Report for
1997 and the proxy solicitation material relative to the Annual Meeting of
Shareholders of WICOR, Inc. to be held April 23, 1998. As to my interest in
the Common Stock of WICOR, Inc. held by Marshall and Ilsley Trust Company,
the Trustee under the WICOR, Inc. Master Savings Trust, I hereby instruct
the Trustee to vote as indicated on the reverse side.
The shares represented by this authorization will be voted as directed by
the undersigned. If no direction is given when the duly executed
authorization is returned, the Trustee cannot vote such shares.
THIS VOTING AUTHORIZATION IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT
THE ANNUAL MEETING OF SHAREHOLDERS OF WICOR, INC., APRIL 23, 1998.
(continued on the reverse side)
41
APPENDIX II
/X/ Please mark your
votes as indicated
WICOR in this example
PROXY
- ------------------------------------------------------------------------
The Board of Directors recommends a vote FOR all nominees in Item 1
and FOR item 2..
- ------------------------------------------------------------------------
1. Election of the following nominees as directors for three-year terms:
Wendell F. Bueche, Daniel F. McKeithan, Jr., George E. Wardeberg
and Essie M. Whitelaw
FOR all nominees WITHHOLD
(except as marked AUTHORITY
to the contrary) to vote for all nominees
/ / / /
(Instruction: To withhold authority to vote for
any nominee write the name below)
------------------------------------------
2. To approve the 1994 Long-Term Performance Plan, as amended.
FOR AGAINST ABSTAIN
/ / / / / /
Please check this box
if you plan to attend
the annual meeting
[ ]
This Proxy is Solicited
by the Board of Directors
Signature(s) __________________________ Date __________________
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
42
FOLD AND DETACH HERE
March 13, 1998
Dear WICOR Shareholder:
We're pleased to send you the enclosed 1997 annual report and proxy
materials. I hope you'll find the annual report interesting and
informative, and that you'll exercise your right to vote at the annual
meeting by returning your proxy card promptly.
I'd also like to invite you to attend WICOR's Annual Meeting of Shareholders
on Thursday, April 23, 1998. This year's meeting will be held at the
Italian Community Center, 631 East Chicago Street, Milwaukee, Wisconsin,
beginning at 2:00 p.m. (Central Time). A map with directions to the center
is on the reverse side of this letter. Free parking is available in a lot
on the south side of the building.
At the meeting, we will elect directors, VOTE ON THE 1994 Long-Term
Performance Plan, as amended, discuss 1997 performance and talk
about the future. As an investor in WICOR, you have a right and a
responsibility to vote on issues affecting your company. Regardless of
whether you plan to attend the annual meeting, please mark the appropriate
boxes on the proxy form, and then date, sign and promptly return the form in
the enclosed, postage-paid envelope. If you sign and return the proxy form
without specifying your choices, your shares will be voted according to the
recommendations of your board of directors.
If you plan to attend the annual meeting, please check the appropriate box
on the proxy card. We welcome your comments and suggestions, and we will
provide time during the meeting for questions from shareholders. I hope to
see you on April 23.
Sincerely,
George E. Wardeberg
President and Chief Executive Officer
43
WICOR
COMMON SHAREHOLDER PROXY
The undersigned hereby appoints George E. Wardeberg and Joseph P. Wenzler,
and each of them, as proxy with the power of substitution (to act by a
majority present or if only one acts then by that one) to vote for the
undersigned as indicated on the reverse side and in their discretion on such
other matters as may properly be considered at the Annual Meeting of
Shareholders of WICOR, Inc. to be held Thursday, April 23, 1998, at 2:00
P.M., at the Italian Community Center, 631 E. Chicago Street, Milwaukee,
Wisconsin, and at any adjournments thereof.
The shares represented by this proxy will be voted as directed by the
shareholder. If no direction is given when the duly executed proxy is
returned, such shares will be voted "FOR" all nominees in Item 1, "FOR"
Item 2, and in the discretion of the proxies on any other items of business
as may properly arise at the meeting.
Please mark, date and sign on the reverse side exactly as name appears and
return in the enclosed postage-paid envelope. If shares are held jointly,
each shareholder named should sign. If signing as attorney, administrator,
executor, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by duly authorized officer.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL
MEETING OF SHAREHOLDERS OF WICOR, INC., APRIL 23, 1998.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
Map of downtown Milwaukee, Wisconsin, showing
location of annual meeting and the routes to take within
Milwaukee and from Chicago, Green Bay and Madison.